Southern investors' funds freeze extended

INVESTORS in the Southern Financial Group face a bleak Christmas with their access to funds suspended for at least another 10 days.

The Federal Court yesterday ordered an extension of a freeze on funds until 4pm Friday, December 21.

The court suppressed most other information in the case that involves Southern as the defendant and the Sydney-based Trust Company as the plaintiff, the party that initiated the court action.

The Trust Company holds security over Southern’s assets on behalf of holders of debentures, which are called Southern Notes.

The Trust Company declined to comment apart from saying its role was “to act in the best interests of the note holders in exercising our powers under the Trust Deed and the law”.

“Our focus is ensuring note holders are treated fairly and equally and we will act in their best interests,” the Trust Company said.

The Age newspaper reported earlier this month the freeze on funds had been sought by the Trust Company.

Speaking for Southern Finance after an earlier hearing of the case, Robert Newlinds, SC, said the Trust Company began asking questions after Banksia Securities collapsed because “there was a perception” that investors would rush to collect debentures issued by similar businesses.

Mr Newlinds said Southern Finance customers had been kept in the dark about the Trust Company’s legal action because both sides wanted to avoid worrying them unnecessarily.

Southern’s general manager Ashley King declined to comment yesterday to a list of questions emailed to him by The Standard regarding the extension of the freeze on funds.

Mr King has previously argued the funds freeze was necessary to allow “fair and equitable treatment of all investors” while efforts were made to reach an agreement with the Bendigo and Adelaide Bank for it to buy most of Southern’s assets.

Southern has sought to sell to the Bendigo and Adelaide Bank following a run of withdrawals by investors, concerned by the collapse of Banksia Securities in October.

Southern investors yesterday expressed disappointment and frustration at the extension of the funds freeze.

One investor, who did not want to be named, said she had taken out a bank overdraft recently for a family holiday in the expectation she would be able to pay it off when her investment in Southern became due for redemption this week.